Will fund expansion plans via Rs 1000-cr ECB: Guj Pipavav
After it posted an EBITDA margin of 48 percent, Gujarat Pipavav is now gearing up for its expansion plans. Prakash Tulsiani, managing director of the company says it will borrow capital worth Rs 1000 crore from external commercial borrowings (ECB).
Tulsiani says the past quarter was the best in the year. The company had about 100,000 twenty-foot equivalent unit (TEUs) for any terminal. The company's net profit grew by 4.3 percent times.
"Our capacity utilisation is in the range of 75 percent on the waterfront. So, we still have room to grow and we will continuously grow and grow our book of business. We are targeting new clients. The overall general market in the shipping industry is weak and in terms of bulk business, we have seen is that the coal volumes are not appearing," adds Tulsiani. On the road ahead, Tulsiani says the issues in the power sector need to be resolved for the company's volumes to go up.
Below is the edited transcript of Tulsiani's interview to CNBC-TV18.
Q: Could you begin by taking us through your numbers?
A: This has been the best quarter of the year for Gujarat Pipavav Port Ltd. We had a 24 percent increase in container volumes. We had an EBITDA margin which grew to 48 percent. It is almost a growth of 33 percent. Last quarter we were at 36 percent. We have the highest number of trains anywhere in India handled to the inland container depots (ICD). We have about 100,000 twenty-foot equivalent unit (TEUs) for any terminal. We have started with these shipments and our net profit grew by 4.3 percent times.
Q: Your margins have come in lower on a year-on-year (YoY) basis. What has resulted in the margins contracting? Where do you see margin stabilising?
A: Our margins have grown in this quarter. Last quarter our EBITDA was at 36 percent and now we are at 48 percent. Margins are based on volumes. It is a number. If the volumes go up, the margins also go up. In the current year, what we have done is we have increased our rates by converting it into US dollars, and we had a good commodity mix in bulk, which has helped us increase our margins.
Q: Your profit and loss (P&L), interest costs have come in lower both year ago levels as well as the quarter ago levels. Is this trend likely to continue?
A: Yes, indeed for our interest cost, The domestic borrowing in Indian rupees will continue to remain in the range of Rs 320 crore. The interest cost would remain what we have seen in this quarter in the range of Rs nine to ten crore. Going forward, we have expansion plans. For that we have ECB (external commercial borrowings), which are being tied up right now and we are going to sign the agreements very soon.
Q: What are your average realisations looking like? What exactly are the factors that determine your average realisations?
A: The average realisations has gone up by 14 percent. We are in the range of 4,800 per TEUs and for bulk of business, it is a commodity mix. The more what we handle as fertiliser and wheat are numbers in the range of 450 per tonne, so it is a product mix to summarise. It is a US dollar tariff, which we have, the refrigerator cargo, which we handle and also the commodity mix, which we will have in the terms of bulk business.
Q: What is the order book currently standing at? Are you likely to bag some more orders?
A: Our capacity utilisation is in the range of 75 percent on the waterfront. So, we still have room to grow and we will continuously grow and grow our book of business. We are targeting new clients. The overall general market in the shipping industry is weak and in terms of bulk business, we have seen is that the coal volumes are not appearing. This is because of the policy in the power sector. So, once these issues are resolved we will ensure that the volumes go up.
Q: Could you tell us what the current debt stands at?
A: We have Rs 230 crore of debt that is in Indian rupee debt. We are going into an expansion of more than 1000 crore and for that we have tied up with external and commercial borrowings, which will be in US dollar term.